A man and power lines are reflected in a Telstra poster adorning a public telephone in Sydney, Australia
Reuters/David Gray

Telstra has conceded that it may have been misleading consumers in an advertisement of "super fast speed boost with maximum download speeds of 100 megabits per second and maximum upload speeds of 40 Mbps." The NBN retail service provider will offer refunds to 42,000 customers, allowing them to change their internet plans or leave their contracts with no fee.

The Australian Competition and Consumer Commission said the telco admitted it was likely to have contravened the law by engaging in misleading or deceptive conduct and making false or misleading representations. Chief executive Andy Penn signed a written undertaking to the ACCC in which the company conceded it may have been misleading consumers in its ad from September 2015 up to this month. Costumers under Telstra’s National Broadband Network plans may get refunds.

Following an investigation, the ACCC concluded that several customers were not getting the high speeds they paid for. Misleading or deceptive conduct and representations are in breach of the Australian Consumer Law.

According to the corporate regulator, these maximum speeds could not be possible in real-world conditions because of the limitations of customers' fibre to the node (FTTN) and fibre to the building (FTTB) internet connections. Its chairman, Rod Sims, confirmed their enquiry found that many of the telco’s FTTN and FTTB customers could not get the maximum speed of their plan.

The worse thing is that several customers could not get the maximum speed of a lower-speed plan, the ACCC stated. It found that up to 26,497 people or 56 percent of FTTN customers on the top 100/40 Mbps plan could not achieve those speed levels, and 9,606 customers could not reach half of that speed.

Telstra reportedly said it had proactively contacted the corporate watchdog about the issue and was taking the lead in the local sector in tackling problems with broadband speed advertising. The telco has submitted a court-enforceable to the ACCC about the remedies it will provide to impacted customers.

The ACCC confirmed that the telco came forward to discuss the issue. "We are pleased that Telstra proactively reported this serious problem to the ACCC and has cooperated in creating a remediation plan for affected customers," Sims said.

Other retail service providers offering broadband plans over the NBN will be investigated by the ACCC. Sims said they are mindful that the issue is not something that involves Telstra alone as he believes it is an industry problem where consumers usually do not get the speeds they are paying for.